TI time is here again and lenders throughout Chicago and the surrounding suburbs are cringing as they prepare to explain to home buyers and home owners in the midst of a refinance that they will have to bring a little more to the closing.

What, might you ask, is TI and why does it affect the bottom line? Well, TI stands for Title Indemnity and it provides a means for title companies to ensure that property taxes for transactions occurring at the end of the property tax billing cycle are paid in full.  While this should be as simple as looking at a property tax bill and paying the balance, it is more complex that that.  In many counties, the tax period has ended without actual property tax bills available to pay.  So the installment is due, but without a tax bill, there is no way to figure out the required payment.  The solution is to collect a best guess amount plus a cushion in anticipation of the bill and paying it when it comes due.

To execute a TI, a title company collects a multiplier of the last installment and holds it in escrow until the tax bill comes out.  The reason they collect a multiplier is to ensure they have a sufficient cushion to account for any tax increases.  The total amount is typically around 1.5%, but some title companies, such as Chicago Title, will collect as much as 2.5% of the last installment.  As an example, if the last tax bill was $5,000, you could be required to escrow as much as $12,500 with the title company for the period from the closing of your mortgage loan to the day the tax bills become available.  In most counties, like DuPage and Kane, this is only a month or so.  In places like Cook County, however, this period can extend for up to 5 months; so planning for this inconvenient aspect of real estate finance is a must.

Let me know if you need help navigating the lending process. And if you’re still in the home exploration process, there’s never a better time to ramp up your home search!

With the “National sites” you can probably click through to schedule an appointment with a listing agent, but keep in mind, they represent the seller, not you, the buyer. The company sites are trying to get you to register or request a showing for one of their listings; odds are, they will be referring you to one of their agents and you’ll be you’ll have no idea what that agents’ level of experience is.

With the individual sites, you’re communicating directly with the person that you will actually be working with. You have the chance to build some rapport, making sure that your wants & needs will be listened to, that your overall style will mesh with your agent and if your home search is extended over a long time period, you’ll know that your agent is keeping an eye on the market and letting you know of new homes that hit that market that match your criteria. And isn’t that what it’s all about? Relationships, Trust & Confidence?

*Information sources used in home search courtesy of the National Association of Realtors Field Guide:

• Internet: 90%
• Real estate agent: 87%
• Yard sign: 59%
• Open house: 46%
• Newspaper ad: 40%
• Home book or magazine: 26%

In the state of Illinois, homes sales activity increasedfor the ninth consecutive month and for the past 11 months straight in the Chicagoland Primary Metropolitan Statistical Area,  Dr. Geoffrey J.D. Hewings, director of the   Applications Laboratory (REAL) of the University of Illinois said  “The forecasts for the next three months (June, July and August) suggest a continuation of the positive changes for sales—in the 16 to 25 percent range in Illinois and in the 19 to 29 percent range in the Chicago region.  Price changes continue to be stubborn, with little or no movement over the three months in Illinois and in the 4 to 6 percent range in Chicago.”    Less formal Realtor polls validates a street level view of these statistics and suggests prices are leveling off at 94-96% of asking price.

With mortgage rates hovering at historic lows and prices leveling off, consider this: It’s never a bad time to make a good investment.  It’s time to get off the fence! So, if you still haven’t found that perfect home, now is the time to ramp up your search and take advantage of the favorable market conditions!

If you are negotiating for the purchase of a home, you might want to ask that the seller provide you with a CLUE (Comprehensive Loss Underwriting Exchange) report on their home. This report can provide you with invaluable insight as to what issues your potential new home may or may have had. However, a buyer cannot have a report pulled on any house they so choose. These reports are available only to those with a “permissable purpose,” in this case the seller must request the report from their insurance carrier.  So if you’re buying a home in a flood plain, garden and duplex down condo, and any time your inspection has found signs of water it may not be a bad idea to dig a little deeper and ask the seller to provide you with a CLUE report for their home.

If you are not at this stage of your home buying process, and are still searching for that perfect home, call or email me, I would be happy to help! And, if you need to get pre-approved for your home mortgage, contact Doug Katz, he’ll take good care of you.

If you were not under contract by the 30 April deadline, unfortunately, you have still missed out on the opportunity to participate in the tax credit. As for the rest of the buyers that are still looking for their perfect new home, there are still plenty of homes available for sale, prices are stable with some reductions taking place and interest rates are low! If you’re not sure how much home you can afford or need a seasoned REALTOR®  to help you fine tune your search and guide you through the home buying process, please let me know!

Chicago fared fairly well in the report.  While our metro area is still showing decreasing prices at -3.0%, it was far from the bottom of the barrel.  Additionally, historical data shows that areas hardest hit by a contraction usually emerge the soonest.  Among the top performing cities where coastal cities, which had reached unsustainable values before the crash.  The good news for current shoppers is that this is the canary in the coal mine.  It gives them a unique advantage of knowing that increases could be around the corner in our market and that good deals are still to be had.

Now that home prices on the move, are you ready to  get pre-approved for your new home? Or are you just interested in exploring the Chicago real estate market? Either way, let me know, I’m here to help!

What can you find out from a home inspection report?

Although many people do get a home inspection, just as many have a difficult time deciphering the reports to find out what’s serious and what isn’t. To make it worse, inspections vary from state to state. Fortunately, the American Society of Home Inspectors, who has a list of inspectors all around the United States, has a specific set of guidelines.

General Inspection

Inspector licensure varies by state, but in Illinois, they must be licensed. The general home inspection covers such things as:

• Structure – how well the walls, ceiling, foundation and more are put together
• Exterior evaluation – landscaping, elevation, drainage, windows
• Plumbing – Checks the condition of piping and identifies the materials used
• Roof and attic – framing, flashing, gutters, ventilation
• Systems – water heaters, duct work, air conditioning, chimney, furnaces, sprinklers
• Garage – Slab, firewall, garage door
• Appliances – including smoke detectors
• Electrical – main panel, types of wiring, grounding, circuit breakers, light fixtures and more

The inspection reports will state whether the Chicago homes for sale have serious health and safety issues, bad or old roofs, systems malfunctions, foundation problems, and moisture and drainage problems. If there are major issues found from your inspection, you have the opportunity to address them with the seller and perhaps negotiate for the repair costs.

 Special Inspection

Some things require a specific license for inspection, lead paint and mold, to name a few. Although you may not want to spend the extra money, these things can cause the “sick house syndrome” (people getting sick a lot for no recognizable reason). These problems should not be ignored: 

• Asbestos
• Radon
• Formaldehyde
• Mold, mildew and fungi
• Rodents
• Lead
• Methane
• Radiation

Some issues aren’t big and can be dealt with fairly easily. Other things, however, are expensive fixes and usually deal breakers. Before you sign closing papers on one of the Chicago homes for sale, get that inspection done to find out what you’re really getting.

If you’re looking for a healthy home in good condition, I can help. Email me at Doug@LincolnParkLiving.com for more information.

Home buyers move ahead by getting their documents to the lender and meeting their requirements for a loan approval and hoping for a good rate.  Then bang, unemployment drops and consumer confidence rises.  The buyer hits a chute on their rate game board and are now looking at a higher rate than originally expected, but they keep chugging along.  Then boom, housing data shows weak sales and Greece nears default on their debt and rates plunge.  The same buyer is now looking at lower rates.  Eventually, they, like the players in the children’s game will happily reach the end and rejoice in their purchase, but throughout the journey they will face fluctuations.  Like the chutes and ladders in the game, they are beyond any control and they can only react the best they can to make the most of the situation at any given time. 

So to all those exasperated buyers, I say take a step back.  When you have hit the point of near maddening frustration with the direction of the rates and when to lock, think in terms of the children’s game many of know and love.  Remember that like the game, you have very little control over which way rates go and there is no fool proof way to predict what rates will be from day-to-day.  By accepting this and by making the best decision that you can with the information that you do have, you will greatly reduce your angst and frustration.  Be assured, that you will eventually reach the finish. So if you want to see what the interest rates are doing today or see how much home you can afford, just let me know, I’m happy to help!

Happy house hunting! And if none of the available open houses catch your fancy, and you’re looking for something tailored to your specific wants & needs, feel free to build your own custom home search. Either way, this is a fantastic weekend to dig deeper into your new home search and do what you can to take advantage of the home buyer tax incentive program.

I’m still not sure if I agree or disagree with the extension. On the one hand, it should continue to give buyers incentive to buy a new home and stimulate portions of the economy. On the other hand, are we supporting portions of the economy on a weak foundation? Will buyers continue to hold off on their buying decisions, waiting to see what other incentives the government will throw at them?

What are your thoughts?